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Repair tax hurts farmers, rural Minnesota (08/07/2013)
From: Tom Haag

Minnesota Corn Growers Association President

During a news conference on July 8, Minnesota governor Mark Dayton said dumping the new tax on farm machinery repair would be his first priority, if the economy allows.

Minnesotaís corn farmers thank the governor for recognizing the impact of this tax and hope this will top his agenda when the legislature reconvenes in February. Actually, the gratitude would extend beyond just farmers.

Imposing an additional tax of nearly seven percent on farmers is not only bad for agriculture, it hurts all of Minnesotaís economy - especially rural communities.

Unfortunately, the tax was implemented on July 1 and farmers are stuck paying it until the legislature repeals it. Meantime, itís important that farmers and rural Minnesotans continue reminding the governor and local legislators why this tax is bad policy, and why it needs to go away during the next session.

Minnesotaís corn farmers understand the economic and budget challenges faced by Governor Dayton and the legislature. Sometimes, leaders need to make difficult decisions and unpopular legislation gets passed into law. However, this proposal was passed in the last moments of session, with little time for proper debate or consideration of its impact on farmers.

Asking farmers to pay almost seven percent more for machinery repairs not only makes little economic sense, itís also unfair.

Farmers sell the food, feed, fuel and fiber they grow in a national market, which includes states that lack such a large tax on machinery repair and maintenance. Unlike a non-farming business, farmers are not able to pass the cost of this new tax onto customers.

Instead, the tax eats straight into a farmerís bottom line and leaves farm families with less money to spend at other local businesses in their community. Itís even worse if youíre a small or beginning farmer who cannot purchase new, expensive machinery and instead rely on maintaining and repairing older equipment.

Fixing modern machinery also isnít cheap. Labor costs can run into the thousands and this tax adds even more to the bill. Deciding to skip certain maintenance might save a farmer a few bucks short term, but things like worn chains and idlers or poorly maintained seed meters could end up costing a lot in the long run.

If just one seed out of 12 doesnít emerge, it might mean a loss of over $12,000 on 500 acres of corn.

It was encouraging to hear Governor Dayton acknowledge that the farm machinery tax is at least on the table for repeal. Now itís time for Minnesotaís farmers and rural businesses to remind the governor and the legislature to take action and get rid of it come February.

The Star Tribune editorial board was right when it called for the repair tax to be repealed in a June 3 editorial titled ďMinnesota must repair a tax mistake.Ē Helping Minnesotaís economy get back on track and create jobs is a challenging task. Unfairly taxing farmers and rural Minnesotans isnít the way to get the job done.



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